BANGALORE: ZoyaBrar, 23, and ArghyaBasu, 25, are proof that entrepreneurs are made, not born. In late 2011, they were both about a year into their jobs at Google, a company that many would give an arm and a leg to work for. Then, a chance meeting with an executive from US-based venture capital firm Artiman set them on the road to entrepreneurship. In a little more than a year, they have made an acquisition in the US, are part-owners of a healthcare company and recipients of Rs 27 crore in funding.

The transformation of Brar and Basu into entrepreneurs is the result of a concept called 'deal creation' - jargon for venture capitalists throwing the bait of an idea and waiting for the right people to bite with a viable proof of concept. This style of investing is gaining popularity in the US, but it is for the first time in India that rookies are being fashioned into entrepreneurs.

Artiman chose Brar and Basu to build a healthcare startup offering high-end diagnostic tests in India because of the 'enthusiasm' they showed when the idea was put to them. "They were ready to jump headlong into the water and figure out how to swim," said Ajit Singh, a partner at Artiman, who first met Brar and Basu at a social event last year. "They were not jaded." Brar is a sociology major from Lady Shri Ram College and Basu studied computer engineering at Jawaharlal Nehru Technological University, Hyderabad.

Two months ago, Artiman invested Rs 27 crore in Gurgaon-based Core Diagnostics in its first round of venture funding. Core, which offers tests in cardiology, endocrinology and oncology, will launch operations later this month.

"We don't know how to make the soap, but we know how to sell it," said Basu, who began work on the concept a year ago.

The two aspiring entrepreneurs had to travel for six months to small towns across India, during which they forsook their salaries to gauge demand and come up with a proof of concept. But to build technology from scratch by hiring scientists would take time. So, they bought a US-based startup, OncoMDx, in a stock-swap deal.

'DEAL CREATION' STYLE OF INVESTING

"These are two kids who went ahead and acquired a Palo Alto company; older entrepreneurs would not have shown such boldness," said Artiman's Singh, also a consulting professor at the School of Medicine in Stanford University.

Singh said specialised tests for many ailments, among them some forms of cancer, are unavailable in India. Test samples are shipped overseas, the results come back in about three weeks and the procedure costs between Rs 20,000 and Rs 1 lakh. Core Diagnostics says it will offer the tests for Rs 4,000-50,000, with results made available in just 48 hours. Artiman, which manages a global corpus of $750 million (about Rs 4,100 crore), will have an equal share of equity of Core Diagnostics, along with the founders and employees.

Artiman has already adopted the 'deal creation' style of investing successfully in the US where it seeded healthcare technology firm Aditazz. Recently, it also backed Click Diagnostics being run by Adam de La Zerda of the Department of Structural Biology at Stanford University. Â

"Instead of waiting for the right team, the venture capitalists are creating deals by coming up with the thesis," said Sharad Sharma, former CEO of Yahoo R&D India, who is also working on a business idea provided by early-stage fund Canaan Partners. "There is no guarantee of money to the entrepreneurs; it is like an engagement and may be broken, but there are strong signals that money is available."

At Core Diagnostics, Brar and Basu, who lacked domain knowledge of the healthcare industry, had to attend several conferences and read a lot for the first two months to gain the confidence of doctors.

"It was a big risk for us, as they did not guarantee money to us," said Basu, pointing out that the founders put in about 80% of the work required to turn the idea into a business. "It was only after we came up with proof-of-concept and did a lot of legwork that they agreed to invest in the business plan."

The startup, which now has a team of 10, has tied up with 50 specialists and physicians working at some of the top institutes in the US who will train their Indian counterparts.

Core Diagnostics will use the funding it received from Artiman to hire specialists and set up laboratories in Delhi, Mumbai and Hyderabad.

This is the third investment in the healthcare sector for Artiman in India. It invested in drug discovery and development firm Cellworks as well as OncoStem Diagnostics, which is focused on diagnosing cancer recurrence. Last October, Artiman put Rs 34 crore in Tonbo Imaging, a startup whose imaging technology has been used in drones, or unmanned aerial vehicles, of armed forces around the world.

Private equity and venture capital investments in the healthcare industry in India are increasing rapidly as supply is woefully low and demand continues to surge. Last year, the industry absorbed $1.2 billion across 48 deals, according to research firm Venture Intelligence. In 2011, there were 38 deals in the sector worth $421 million. "A rising tide lifts all boats, but we are building an industry here as no one conducts these tests in the country," said Artiman's Singh.